nCOV-2019 In China: Risks and Opportunities for Chemical Industries
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1. Profiles of respondent
a. Position:
1/3 of the respondents are Senior-Management (Group Head, President, VP, General Manager, Department or Sector Director etc.), followed by Marketing (20%), Sales (15%), and R&D (13%).
b. Industry:
Around 1/2 of the respondents come from Specialty Chemical companies, while 30% of them are from Chemical Conglomerates.
c. End-use market & products relevant to nCOV:
The 6 most important end-use markets of the respondents’ companies are:
1. E&E
2. Automotive
3. Energy
4. Adhesives & Sealants
5. Polymers & composites
6. Paint & Coating
63% of the investigated companies sell products / equipment / systems to fight against viruses & control their spread. The breakdown of supplied products includes the following:
d. Location of HQ
Most of the companies investigated have HQ in Europe, followed by Non-Chinese Asian countries, North America and Mainland China.
e. Location of Production
72% of the respondents’ companies have production in China, including 5% having production in Hubei Province (where the nCOV emerged).
f. Business size in Mainland China
The size of the business of the respondents’ companies in China vary and is categorized as follows:
2. Estimated time when production is expected to rebound to its level before the nCOV
63% of the respondents expect a rebound of their production to its pre-nCOV level in the first half of 2020.
By location of HQ
A majority of the respondents expect that their production will recover in 2020, while strongest impact upon production rebound is expected by the Asian but non Chinese companies. This is related to the supply chain and end-use clients who are located in Mainland China with no short-term replacement.
3. How do you expect nCov will impact your 2020 business (2020 VS 2019)?
nCOV strongly increased the uncertainty of economy in China and the other parts of the world. Because the virus originated in China, China is expected to suffer more negative impact in 2020.
In general, 65% of the respondents expect little impact of nCOV to their Business OUTSIDE of China compared to 36% foreseeing little impact to business IN China.
a. The expected impacts of business In Mainland China due to the nCOV
By company size and for their business In Mainland China:
Highest ratios of Tier 3 companies foresee negative impacts
Around 2/3 investigated Tier 4 foresee little impacts
Around 15% of the investigated Tier 2 companies foresee positive impact
By HQ location and for their business IN Mainland China in 2020:
Highest ratio of European companies foresees negative impact (64% see negative or very negative impact)
By end-use market:
Respondents foreseeing the most negative impact of nCOV on their business in China are those targeting Adhesives & Sealants as end-use market, followed by those targeting E&E (Electronics & Electrical), Automotive and HPC (Home & Personal Care).
Respondents foreseeing the most Positive Impact of nCOV on their business in China are those targeting Feed & Crop / Agrochemical, followed by Food & Nutrition, Polymers & Composites and Medical Devices & Pharmaceutical.
b. The expected impact of business OUTSIDE of Mainland China due to the nCOV
By company size for their business OUTSIDE of Mainland China:
Highest ratio of Tier 3 companies foresees negative impacts
Around 15-20% of the investigated companies foresee positive impact, with highest ratio of Tier 2 companies foresees positive impact
By HQ location:
Around 15-30% of the respondents foresee nCOV (very) negative impacts to their business OUTSIDE of China
More than 30% of the investigated Chinese companies predict positive impact to their oversea business
By end-use market: For their business OUTSIDE of Mainland China,
Highest ratio of respondents working for clients in the industries of Specialty Fluids, Medical Devices & Parmaceutical, Adhesives & Sealants and Home & Personal Care predict negative impacts
Share of respondents expecting “negative” & “positive” impacts are both high for the companies working for clients in Feed & Crop/Agrochemicals
4. Short-term actions and long-term strategy to fight nCOV
a. Short-term actions
In the short-term, a majority of the companies choose to limit business trips and rely as much as possible on remote work/meetings.
38% of the respondents’ companies have donated or will donate money, materials or products to the hospitals and oranizations to help fight the virus.
This percentage is much higher for companies that already have relevant products or solutions to help control the spread of nCOV.
b. Long-term strategies
How will the current nCOV crisis influence your strategy in the medium to long-term?
Half of the companies plan to improve HR processes & internal communication
40% of them put EHS process modification as one of the long-term strategies
Other strategies mentioned: look for new (non-) markets
5. Biggest problems / questions due to the nCOV crisis
When asked “What is the most important question / problem you are facing due to the current nCOV crisis in China?”, 78 of the 136 respondents gave their answers. The most listed challenges and questions are related to:
Logistics
Governmental Policy
Uncertainty of the future economy
Shortage of raw materials and labor forces
Decreasing client demands / downstream
Labor safety
Blocked internal & external communication (esp. business trip, customer visits etc.)
Keyword Cloud based on the answers of the 69 feedbacks
6. Conclusion
The strict quarantine measures taken by the Chinese government have postponed the restart of the full operation of most of the Chinese companies from the end of the Chinese New Year Festival (End of the Chinese New Year is traditionally the Lantern Festival, which was 8th Feb. for 2020) to Q2 2020 or even later.
The unpredictable break of the “World Factory” has quickly led to sudden and severe Supply Chain Issues to the chemical industries, mainly due to upstream shortage and domestic & international logistics. Uncertainty remains about the needs and demand of end-use markets which have temporarily largely decreased by the crisis.
While many currently predict negative impacts on the activities of chemical companies in China and the rest of the world, the fact remains that others anticipate a rebound in certain downstream markets in 2020, in particular chemical companies with customers in Feed & Crop/Agrochemicals, Food and Nutrition, Medical Devices, Polymers & Composites and Energy show the most positive attitudes on this subject.
Many chemical companies have taken immediate measures to protect the safety of their employees (no business trips, no meetings, etc.), to reorganize their operations (remote-work, hygiene measures in the field) and to help fight against the virus which shows a remarkable adaptation, reactivity and flexibility of their production’s capacities.
Most of the respondents’ companies are already thinking about longer term strategy modifications in all aspects (HR, EHS, Supply Chain, Channel etc.) to increase their capability and mitigation program when facing a crisis.
Source from daydream